Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT (FRINGE BENEFITS AND SUBSTANTIATION) ACT 1987 No. 139 of 1987 - SECT 7

7. After section 10 of the Principal Act the following sections are inserted:
No reduction of operating cost in a log book year of tax unless log book
records and odometer records are maintained

"10A. Where one or more car fringe benefits in relation to an employer in
relation to a year of tax relate to a car while it was held by a particular
person (in this section called the 'provider') during a particular period (in
this section called the 'holding period') in a year of tax that is a log book
year of tax of the employer in relation to the car, the employer is entitled
to a reduction in the operating cost of the car on account of business
journeys undertaken in the car during the holding period if, and only if:

   (a)  if either of the following subparagraphs applies:

        (i)    the provider commenced to hold the car during the last 12 weeks
               of the year of tax;

        (ii)   the Commissioner is satisfied, having regard to the provider's
               circumstances, that it would be unreasonable to expect log book
               records and odometer records in relation to the car to have
               been maintained by or on behalf of the provider for an
               applicable log book period in relation to the car;
the employer, in his or her return for the year of tax, specifies a percentage
as the nominated business percentage applicable to the car in relation to the
provider for the holding period; or

   (b)  in any other case-both of the following conditions are satisfied:

        (i)    log book records and odometer records are maintained by or on
               behalf of the provider for the applicable log book period in
               relation to the car and, if the provider is not the employer,
               are given to the employer before the declaration date; and

        (ii)   the employer, in his or her return for the current year of tax,
               specifies a percentage as the nominated business percentage
               applicable to the car in relation to the provider for the
               holding period, not being a percentage that exceeds the
               business percentage established during the applicable log book
               period. No reduction of operating cost in a non-log book year
               of tax unless log book records and odometer records are
               maintained in log book year of tax

"10B. Where one or more car fringe benefits in relation to an employer in
relation to a year of tax relate to a car while it was held by a particular
person (in this section called the 'provider') during a particular period (in
this section called the 'holding period') in a year of tax that is not a log
book year of tax of the employer in relation to the car, the employer is
entitled to a reduction in the operating cost of the car on account of
business journeys undertaken during the holding period in the car if, and only
if:

   (a)  odometer records are maintained by or on behalf of the provider in
        relation to the car for the holding period and, if the provider is not
        the employer, are given to the employer before the declaration date;
        and

   (b)  the employer, in his or her return for the year of tax, specifies
        whichever of the following percentages is applicable:

        (i)    the percentage that was:

                (A)  the nominated business percentage applicable to the car
                     in relation to the provider for the period that was the
                     holding period in the year of tax that was the last log
                     book year of tax of the employer in relation to the car;
                     and

                (B)  specified in the employer's return for that last log book
                     year of tax;

        (ii)   if the percentage referred to in subparagraph (i) would
               otherwise be applicable but the employer is of the opinion that
               the percentage calculated in accordance with the formula:
N-U
where:
N is the percentage referred to in subparagraph (i); and
U is the percentage that represents a reasonable estimate of the underlying
business percentage applicable to the car in relation to the provider for the
holding period;
is a percentage that:

                (A)  if the car is a low business kilometre car of the
                     provider in relation to the year of tax-exceeds nil; or

                (B)  in any other case-exceeds 10%;
a percentage as the nominated business percentage applicable to the car in
relation to the provider for the holding period. Nominated business percentage
to be reduced if it exceeds business percentage established during applicable
log book period or if it is unreasonable

"10C. (1) Where:

   (a)  an employer, in his or her return for a year of tax, specifies, or
        purports to specify, a percentage (in this subsection called the
        'excessive percentage') of the kind mentioned in subparagraph 10A (b)
        (ii) in respect of a car held by the provider of a car fringe benefit
        in relation to the employer in respect of the car during a period (in
        this subsection called the 'holding period') in the year of tax; and

   (b)  the excessive percentage exceeds the percentage (in this subsection
        called the 'reduced percentage') that is the lesser of the following
        percentages:

        (i)    the business percentage applicable to the car that was
               established during the applicable log book period referred to
               in subparagraph 10A (b) (ii);

        (ii)   the percentage that represents a reasonable estimate of the
               underlying business percentage applicable to the car in
               relation to the provider for the holding period; the following
               provisions have effect:

   (c)  the employer shall be treated as if he or she had, in the return,
        specified, in respect of the car, the reduced percentage instead of
        the excessive percentage;

   (d)  if the employer, in his or her return for a subsequent year of tax,
        specifies, or purports to specify, in respect of the car, the
        excessive percentage in accordance with the condition set out in
        subparagraph 10B (b) (i)-the employer shall be treated as if he or she
        had, in the return for that subsequent year of tax, specified, in
        respect of the car, the reduced percentage instead of the excessive
        percentage.

"(2) For the purposes of this Act, where:

   (a)  subparagraph 10B (b) (ii) applies in relation to a car held by a
        provider of a car fringe benefit during a period (in this subsection
        called the 'holding period') in a year of tax; and

   (b)  the employer concerned fails to specify, in his or her return for the
        year of tax, a percentage as the nominated business percentage
        applicable to the car in relation to the provider for the holding
        period; the employer shall be treated as if he or she had, in the
        return, specified, in respect of the car, as that nominated business
        percentage, the percentage that represents a reasonable estimate of
        the underlying business percentage applicable to the car in relation
        to the provider for the holding period.".